Taiwan Semiconductor Manufacturing Co (TSMC, 台積電), the world’s biggest contract chipmaker, yesterday posted its lowest quarterly profits in about eight years as the global recession hurt electronics consumption.
But the company said it expects demand to rebound vigorously this year, which could help boost revenues rebound by more than 80 percent this quarter and the rebound could extend into the next quarter.
A rosier outlook for the second quarter could build on clearer business visibility as TSMC chief executive Rick Tsai (蔡力行) also revised upward his forecast for global electronic device unit shipments this year and the prospects for the whole semiconductor industry.
Global unit shipments of electronic devices including computers, handsets and consumer electronics could drop 10 percent year-on-year this year, Tsai said, rather than the 15 percent to 20 percent fall he estimated three months ago. Revenues for the global semiconductor industry could decline 20 percent this year, Tsai said. He had initially forecasted a 30 percent decrease year-on-year.
Tsai nevertheless said that “this year is a very difficult period for the [semiconductor] industry and for us,” citing the gloomy economy.
In the first quarter, TSMC’s earnings plunged 94.5 percent to NT$1.56 billion (US$46.94 million), or NT$0.74 per share, compared with NT$28.14 billion in the same period last year, which also marked the weakest quarterly earnings since the third quarter of 2000.
After a deep decline over the past two quarters, “we are now seeing a substantial increase in orders in the second quarter and we believe the company’s business will rebound dramatically,” TSMC financial executive Lora Ho (何麗梅) told an investor conference yesterday.
Revenues could be between NT$71 billion and NT$74 billion in the April-to-June period, Ho said. This would represent growth of more than 80 percent on a quarterly basis, compared with NT$39.5 billion in the first quarter, of which 3 percent would come from Chinese customers.
“The forecast is much better than I expected,” said Michael Chou (周立中), a semiconductor analyst at Deutsche Securities Asia Ltd’s Taipei branch. Chou had expected TSMC’s revenues to rise at a 63 percent quarterly pace this quarter.
“Customer restocking, demand for new products and recovering end demand should be the driver,” Chou said.
He gave a “buy” rating on TSMC, with target price of NT$60.
Factory utilization rate would be much higher than 70 percent, from below 40 percent in the first quarter, TSMC said.
Gross margin could rally to between 43.5 percent and 45.5 percent this quarter, compared with 18.5 percent last quarter, TSMC said. Operating margin could rise to between 30.5 percent and 32.5 percent from 3.1 percent, the company said.
“We think [TSMC’s business] will be flat, or even slightly better in the third quarter. The fourth quarter will be lower slightly than the third quarter,” Tsai said, adding that this year would be a very difficult period for the company and the semiconductor industry.
TSMC planned to budget US$1.5 billion for capital spending this year, down about 20 percent from US$1.89 billion spent last year.
The company intends to spend about 70 percent of the capital on next-generation 40-nanometer and 28-nanometer technologies.
In a separate statement, TSMC announced it would collaborate with Japanese firm Fujitsu Microelectronics Ltd on cutting-edge process technology production for manufacturing at the Tokyo-based company.
Under an agreement, Fujitsu Microelectronics would expand its 40-nanometer generation logic IC business with production at TSMC’s fabs. They are also set to initiate discussions on a collaborative development of high-performance process technologies for 28-nanometer and below for Fujitsu Microelectronics’ product applications.
TSMC shares and smaller rival United Microelectronics Corp (聯電) yesterday rose 6.98 percent and 6.9 percent to close at NT$55.2 and NT$12.4 respectively.
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